December 03, 2008

Indian cement production to grow up by 11.5% in 2008-09 – CMIE

Centre for Monitoring Indian Economy, in its monthly report, said that cement demand outlook this fiscal remains healthy, driven by rising investment in construction and real estate sectors.

The CMIE expects cement production to grow up by 11.5% and cement consumption by 12% during 2008-09. The total annual installed capacity of the cement sector increased by about 22 million tonnes during 2007-08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on stream in 2008-09, boosting the production growth.

CMIE in the report said that "We expect the production to grow 11.5% during 2008-09 backed by the northern region, which has seen additional capacity of around 15 million tonnes in 2007-08. The year 2009 would see an addition of another 7 to 8 million tonnes in the region." It added that western and eastern regions would continue to face a deficit. However, surplus volumes from the north are expected to meet demand in these regions.

CMIE said that sales volumes would drive the sector’s growth during the fiscal. With limited YoY rise in realizations, the measures to improve cost efficiencies would play a significant role in determining the sector’s profitability. After decelerating in the previous 3 months, cement production and consumption growth rate picked up during February 2008.

Coming over a low base, production and consumption grew by a robust 12.6% and 14.8%, respectively. The growth was driven by a healthy performance of the northern region, which saw its production and consumption rising 25% each.